from the making-it-easy dept

We recently noted that a bunch of courts had been killing off bad software patents thanks to the Supreme Court's ruling in Alice v. CLS Bank. And now, that ruling is even leading the trolls themselves to give up. Notorious patent troll Lumen View recently dropped its appeal in its case against the website FindTheBest, saying that the ruling in Alice made it clear it wouldn't win:

Appellant Lumen View Technology, LLC respectfully moves to dismiss voluntarily
the appeal under Fed. Cir. R. 42(b). The United States Supreme Court in Alice Corporation
Pty. Ltd. v. CLS Bank International, 573 U. S. ____ (2014) (No. 13-298), has provided
greater clarity on patentability in light of 35 U.S. C. §101. The parties respectfully make a
request for dismissal as an efficient resolution of the instant appeal and to conserve judicial
resources.

If you don't recall, Lumen View holds a patent (US Patent 8,069,073) (now officially and finally decided as invalid) for a "system and method for facilitating bilateral and multilateral decision making." Don't ask what that means because it doesn't mean much. Even before the Alice ruling, the district court had said the patent was invalid as merely being an "abstract idea" and thus unpatentable subject matter.

Throughout the case, Lumen View (and its lawyers) had done some astounding things, including claiming that FindTheBest's CEO committed a hate crime for calling Lumen View a patent troll. Lumen View's lawyers later sought a gag order against FindTheBest's Kevin O'Connor, demanding that he remove from the internet his discussions about Lumen View and his willingness to fight back against the troll rather than give in.

For a company like that to finally give up -- before the appeal was even heard -- shows just how powerful that ruling in Alice is. The legal fight is not totally over. FindTheBest is still arguing that Lumen View is guilty of racketeering (which is unlikely to go anywhere), and the two sides are still fighting over Lumen View having to pay FindTheBest's legal fees -- but the main event is now concluded, and the patent is officially and totally invalid.

from the fee-shifting-ftw dept

We've been talking about the importance of fee shifting in deterring bogus patent trolling suits for a while now. And while the trial lawyers fear of fee-shifting stupidly led them to kill the patent reform bill that included them, thankfully, the Supreme Court made fee shifting in patent cases more reasonable after smacking down the Federal Circuit (CAFC) once again.

You may recall this case: After patent troll Lumen View went after startup FindTheBest, FTB's CEO Kevin O'Connor announced that he'd spend $1 million fighting the troll rather than settling for the $50,000 offered. In response, Lumen View accused O'Connor of "hate crimes" for calling Lumen View a patent troll. Later, Lumen View sought (and thankfully failed) to get a gag order on FTB for revealing information that was perfectly fine to reveal. In fact, Lumen View demanded that FTB try to remove prior disclosures from the internet.

Of course it was all just posturing. While this was going on, Lumen View kept making more and more desperate attempts to get FTB to settle. But FTB knew it didn't need to settle because it wasn't violating the patent -- something it made clear to Lumen View right at the beginning. In the end, the court not only found that FTB didn't infringe, it invalidated the patent itself (US Patent 8,069,073, in case you were wondering).

And, now, Judge Denise Cote has also told Lumen View that, in light of the Octane Fitness ruling, it has to pay FTB's legal fees as well. The ruling notes that it was clear from the outset that FTB didn't infringe (whether or not the patent was valid), and Lumen's continued pursuit of FTB was clearly abusive.

First,
Lumen’s lawsuit against FTB was “frivolous” and “objectively
unreasonable.” “To be objectively baseless, the infringement
allegations must be such that no reasonable litigant could
reasonably expect success on the merits.” .... No reasonable litigant
could have expected success on the merits in Lumen’s patent
infringement lawsuit against FTB because the ‘073 Patent claimed
a bilateral matchmaking process requiring multiple parties to
input preference information, while FTB’s “AssistMe” feature
utilizes the preference data of only one party. Lumen’s own
claim construction brief construed the independent claim of the
‘073 Patent as requiring two or more parties to input preference
data. That submission urged the term “preference data” to be
construed “in conjunction with its plain and ordinary meaning.”
And Lumen’s Complaint alleged that FTB’s infringement was
predicated on the alleged use of bilateral preference matching.
But FTB does not employ bilateral preference matching.

And the most basic pre-suit investigation would have
revealed this fact.... And if there were any confusion on this score -- and Lumen has provided no basis to find it was confused by the website -- Lumen was certainly on notice of this fact from the outset of the litigation. FTB’s Seigle and O’Connor informed Lumen that
FTB’s AssistMe feature did not use the bilateral or multilateral
preference matching process in a telephone conversation of June
19. And FTB’s attorney again informed Lumen by telephone and by
letter of June 26. Yet Lumen proceeded with an obviously
baseless lawsuit, failing to point to any specific way in which
FTB infringed the patent.

The Judge makes it clear she knows that this was purely about trolling for settlement money all along:

Lumen’s
motivation in this litigation was to extract a nuisance
settlement from FTB on the theory that FTB would rather pay an
unjustified license fee than bear the costs of the threatened
expensive litigation. Lumen never sought to enjoin FTB from the
allegedly infringing conduct in its prayer for relief. Lumen’s
threats of “full-scale litigation,” “protracted discovery,” and
a settlement demand escalator should FTB file responsive papers,
were aimed at convincing FTB that a pay-off was the lesser
injustice.

Furthermore, the judge notes that since Lumen filed a bunch of very similar complaints, fees are certainly justified since the company seems to be using patent lawsuits as "part of a predatory strategy aimed at reaping financial advantage from the inability or unwillingness of defendants to engage in litigation against even frivolous patent lawsuits."

This is a great win for a company that was willing to stand up against a bogus patent troll lawsuit, and it's great to see that the troll will now have to pay up (how much will be determined later). Once again, we see how badly CAFC had screwed things up (for years!) with its ridiculously high standard for patent fees. Thanks to the Supreme Court fixing things in the Octane ruling, hopefully, we'll see more companies willing to stand up to trolls and not having to worry so much about how much it will cost to defend themselves against obviously bogus claims.

from the abstract-ideas dept

We've been covering the ridiculous lawsuit by patent troll Lumen View against FindTheBest.com. When we last checked in, Lumen View was trying to get a gag order on FindTheBest and its CEO to get them to stop talking about the case. Last week that failed miserably, with the court saying:

The plaintiff does not come close to carrying the burden of justifying imposition of a gag order. The plaintiff first explains that its motion is predicated on Federal Rule of Evidence 408, which restricts the admission of settlement negotiations into evidence. That argument is meritless. Rule 408 is a rule of evidence. It is inapposite where, as here, the question is not whether material will be admitted into evidence in court but whether a party may discuss certain matters in public.

That was just the warmup, though, because now the court has invalidated the patent itself (US Patent 8,069,073), saying that it's unpatentable subject matter as an "abstract idea." The ruling relies on the Supreme Court's Bilski ruling and the super confusing CAFC ruling in CLS Bank v. Alice Corp.

Applying the principles of Benson, Flook, Dieher, and Bilski, along with what guidance can be wrought from Alice, it is evident that Claim 1 of the ‘073 patent claims an abstract idea and does not qualify as a “process” under Section 101. The ‘073 patent claims the idea of bilateral and multilateral matchmaking using a computer in the context of a financial transaction or an enterprise. It is preemptive in the broadest sense. And its only real limitation –- the use of a computer -- constitutes mere post-solution application of an abstract idea to a common context. The patent must be invalidated under any of the above described Supreme Court precedents as well as under either the Judge Laurie or the Judge Rader methodology in Alice.

It then goes into an almost astounding amount of detail as to why the patent is invalid. Basically, from whatever direction you look, the patent never should have been granted, and the court makes that pretty clear. A few choice quotes:

There is no inventive idea here. Having two or more parties input preference data is not inventive. Matchmakers have been doing this for millennia. Nor is an unspecified closeness of fit process an inventive idea. It is merely a mathematical manifestation of the underlying process behind matchmaking: determining good matches. Nothing in the ‘073 patent evinces an inventive idea beyond the idea of the patent holder to be the first to patent the computerization of a fundamental process that has occurred all through human history.

And, later, a quote that highlights how just asking a computer to do something doesn't make that computer a specialized machine:

Merely directing a computer to perform a function does not transform the computer into a specialized computer. Such a principle would lead to the absurd result of allowing the patenting the computerized use of even the most basic abstract ideas. Given the ubiquity of computers in modern life, adopting such a principle would have enormous preemptive effect. Nothing in Section 101 or the precedents interpreting it allow a party to monopolize the building blocks of innovation in a computerized world.

We'll see if Lumen View appeals, but so far it's been shown to be way out of its depth here. And, of course, it's still facing racketeering charges from FindTheBest over the manner in which it attempted to troll the company. Finding the patent invalid can't be helpful in trying to claim that Lumen View wasn't shaking down FindTheBest...

from the you-fail-at-law dept

We recently wrote about how patent troll Lumen View's lawyer Damian Wasserbauer had gone off the deep end, claiming that an entrepreneur who was fighting back against the trolling was guilty of a hate crime. Kevin O'Connor, the CEO of FindTheBest (FTB) didn't want to give in to a patent troll shakedown, turning down a $50,000 settlement offer and pledging to spend $1 million fighting Lumen View just on principle. That's resulted in a countersuit, arguing that Lumen View is engaged in extortion and racketeering. Wasserbauer (who, frankly, appears to be a bit out of his league here) doesn't seem to be handling the publicity very well. He's asking the court for an astoundingly broad gag order against O'Connor, including saying he needs to try to remove from the internet prior disclosures.

For the foregoing reasons, Lumen View respectfully requests that the Court grant its
Motion for a Protective Order ... to
protect Lumen View’s confidential information and (1) prohibiting FTB and its attorney from
further communicating with representatives of the media regarding confidential settlement
information, or posting such information on social media, (2) require FTB and counsel to take
necessary steps to remove from the internet its prior media disclosures, blog posts or press
releases that disseminate this protected information, and (3) to grant any other such relief as this
Court deems just and proper.

Yeah, good luck with that...

Of course, as Joe Mullin notes over at Ars Technica, the entire basis of Wasserbauer's argument appears to be a significant misreading of the law:

Wasserbauer's request has a couple of problems. First, his idea of what constitutes "confidential information" is pretty broad—it includes not just the $50,000 demand but Wasserbauer's own simple admission about who is behind Lumen View. Second, FindTheBest never signed any kind of non-disclosure or confidentiality agreement....

[....] The rule that Wasserbauer cites, Rule 408 of the Federal Rules of Evidence, is not actually the legal gag order he apparently imagines it to be. The rule doesn't say anything about talking to the media. It simply states that offers of compromise or settlement are often not admissible as evidence in court.

And we won't even get into the laughable claims by Wasserbauer that there's no First Amendment worries in such a gag order, because that's clearly false. It seems clear that Wasserbauer isn't happy with the media attention -- most trolls aren't -- especially since it's been fairly effective in highlighting the way Lumen View's trolling works. Trolls often get away with what they do because it's too much effort to even figure out how to fight back. If someone else is doing it publicly, it lowers the barrier tremendously.

from the downward-spiral-of-trolldom dept

When we recently discussed an event that pitted innovators against patent trolls (which happened last night), I had no idea that one of the innovators speaking was embroiled in a legal battle that is equal parts contentious and maddening hilarity. Kevin O'Connor of FindTheBest was sent the kind of settlement offer we see far too often these days for violating a patent that essentially covers collecting multiple user preferences on the internet. The way it was supposed to work, in the mind of patent trolls, was that O'Connor would realize the offer of $50,000 was likely less than it would cost for a legal battle, causing him to immediately pay patent troll Lumen View. Things, as you will shortly see, did not go as planned.

Instead of kowtowing to the troll's demand for $50,000, O'Connor decided to pledge to spend $1 million fighting. He knows it's not the rational business decision... and he doesn't care. Now, we're getting a vision of how FindTheBest is putting that money to use. The company has made a novel legal claim, saying that the troll that came after it is so reckless, it has engaged in outright extortion, violating racketeering laws.

The claim follows an investigation of the troll that sued the startup. The investigation started when O'Connor and FindTheBest Director of Operations Danny Seigle simply started making phone calls. "The first thing you think is, who the hell are these guys?" O'Connor ultimately called the lead inventor listed on the patent, which describes a system for "multilateral decision-making."

There have been few attempts at applying RICO laws against patent trolls in the past. Cisco did it once, unsuccessfully. However, the subsequent actions by Lumen View and its legal council won't do anything to help its RICO defense, given that every single action it takes seems to be the verbal and legal equivalent of "hey, it'd be a shame if anything happened to your business." O'Connor, clearly motivated to fight the troll, took the logical step of contacting the inventor listed on the patent. Lumen View's response? Accusation that a hate crime was committed. Seriously.

Lumen's attorney made the claim that calling someone a "patent troll" was actually a "hate crime" under “Ninth Circuit precedent." After O'Connor contacted Shapiro, Lumen View attorney Wasserbauer threatened to file criminal charges—unless FindTheBest settled the civil case immediately, apologized, and gave financial compensation to Shapiro. The offer was "good until close of business that day," Wasserbauer allegedly said.

Calling an inventor is a hate crime. Calling someone a patent troll is a hate crime. We're left with two possibilities. Either Lumen View's lawyer doesn't know a whole lot about this whole law thing he's engaged in, or its simply trying to intimidate O'Connor using scary terms and threatening to sling mud. That's because that accusation of hate-crime is completely without merit. Go ahead, look for yourself and see where in any federal or state hate-crime legislation a patent troll is a protected party, which consists of race, religion, ethnicity, nationality, gender, sexual orientation, gender identity, or disability. The closest thing that might apply to patent trolls is disability, as in their disabled nature when it comes to producing a freaking product or service. But that's a stretch even a drunk judge is unlikely to buy.

The rest of Lumen View's actions put the RICO crosshairs squarely on its foreheads. O'Connor's suit alleges that its impossible for FindTheBest to have infringed on the patent, since FTB only collects preferences for users one at a time and the patent is for multiple users entering preferences. The suit also alleges that Lumen View didn't do any investigation beyond a simple internet search and alleges that they have Lumen View's own expert witness to attest as such. Then there's all the other threats in the settlement letters.

The threat letter is also full of barely veiled threats that Lumen will make the lawsuit as expensive as possible. In fact, the majority of the letter describes how the defendant company must take drastic steps to collect all its electronic and other documents now that it has been sued—if it doesn't, sanctions may occur, says Lumen. Finally, The letter makes technological demands that would be almost impossible to meet without shutting down one's business. In the Lumen View letter, it instructs the target company to immediately preserve "the complete contents of each user's network share and e-mail accounts," writes Lumen. That's in addition to "system sequestration," meaning that any accused "systems, media, and devices" should be "remove[d]... from service to properly sequester and protect them."

Put more simply, Lumen View is asking an internet-based company to not use any of their computers if they don't settle, which is exactly the "hey, it'd be a shame if anything happened to your business" routine. The entire point of the discovery process in situations like this is often to make life hell on the target company, the threat of which causes it to settle. It's a form of extortion by any reasonable definition of the word.

The great thing is that O'Connor doesn't appear to care.

"There's a lot of outrageous stories, but everyone's so damn afraid of coming forward—It's like going against the Mafia," he said. But the idea that trolls may retaliate against those who speak out is overblown, he thinks. "If they want to try to teach me a lesson, go for it. This will be my retirement. I'll fight them."

If it's a rallying cry to the larger innovative world to fight patent trolls, it needs a first-blood victory behind it to really motivate the troops. Here's hoping O'Connor is victorious. Oh, and sorry for all the hate-criming going on in this post. It's so hard to call a troll a troll these days.